PhytoMedical Technologies
Posted by Eddy Elfenbein on February 27th, 2006 at 10:06 pm

David Phillips at 10Q Detective is unimpressed with PhytoMedical Technologies (PYTO.OB):

The 10Q Detective suggests that if PhytoMedical Technologies really wants to be taken seriously by the investment community—Perchance the Company could design a clinical trial that examines the safety and efficacy on the potential appetite-stimulating properties of a well-known plant-derived compound on the cachexia of cancer, HIV/AIDS symptomatology, and other wasting syndromes. This medicinal plant is called, cannabis sativa.
To be blunt (BA!)—given the Company’s current fundamental outlook—one would have to be smoking cannabis daily to even consider buying this stock.

I guarantee you’ll never read that in a Merrill research report.

The Future of Food
Posted by Eddy Elfenbein on February 27th, 2006 at 7:59 pm

Steven Milloy, the author of Junk Science Judo: Self-defense Against Health Scares and Scams, looks at the film “The Future of Food.”

Produced by Deborah Koons Garcia, the widow of the Grateful Dead’s Jerry Garcia, the movie’s overriding themes are allegations that biotech crops and food are unsafe and that a government-industry cabal is foisting dangerous products on an unwitting public.
Nothing could be farther from the truth.
Biotech crops and foods are among the most thoroughly tested products available. No other food crops in history have been so thoroughly tested and regulated. Before biotech products are marketed, they undergo years of safety testing including thousands of tests for potential toxicity, allergenicity and effects on non-target insects and the environment.
‘The Future of Food,’ for example, dredges up the 2000 scare involving a biotech corn that had not yet been approved for human consumption but that was detected in Taco Bell taco shells. A few consumers, egged on by anti-biotech activists, alleged the corn caused allergic reactions. But the movie glossed over the fact that the U.S. Centers for Disease Control and Prevention tested those consumers and reported there was no evidence that the biotech corn caused any allergic reaction in anyone.
Another long-buried myth excavated by Garcia was that biotechnology harms biodiversity. But so far it doesn’t appear to represent any greater risk to biodiversity than conventional agriculture and it actually seems to have some demonstrable beneficial impacts on biodiversity. An infamous biodiversity scare featured in the movie involved Monarch butterflies. The scare occurred during 1999-2000 when the media trumpeted alarmist results from two laboratory studies reporting that biotech corn might harm Monarch butterfly larvae. Subsequent field studies soon debunked the scare, reporting that Monarch larvae actually fared better inside biotech cornfields than in natural areas because of less pressure from predators. Needless to say, Monarchs in biotech cornfields also did much better than those in conventional cornfields sprayed with insecticides.
The movie claims that once biotech crops are planted, control over them is lost and they ‘contaminate’ non-biotech or organic crops. This is misleading since 100 percent purity has never been the reality in agriculture. Biological systems are dynamic environments, meaning that regardless of the method of production — conventional, organic or biotech — trace levels of other materials are always present in seed and grain. Since all commercial biotech traits are fully approved by U.S. regulatory agencies, their presence — in large amounts or trace amounts — is fully legal and safe.
With respect to organic farmers, the Department of Agriculture’s rules for organic products specifically say that the certification of organic products is process-based — meaning that if the proper processes are followed, the unintended presence of non-organic or biotech traits doesn’t disqualify the product from being labeled as ‘organic.’
To date, biotech crops haven’t harmed organic farmers. The coexistence of biotech, conventional and organic corn, soybean, and canola has been effectively working since 1995, when the first biotech crops were introduced. During that period, in fact, both biotech and organic farming have grown remarkably.
Garcia wants movie viewers to overlook the fact that U.S. regulators — including the Department of Agriculture, Environmental Protection Agency and the Food and Drug Administration — have established a robust framework and rigorous process for evaluating biotech product safety. Developers spend years generating data for one product to be submitted for approval.
A major take-home message of the movie is that consumers should demand labeling of biotech foods. But this would only increase the cost of food production while failing to provide any meaningful information to consumers. Biotech crops have been determined by regulators to be essentially equivalent to those of conventional crops. Corn is corn, in other words, no matter what anti-biotech activists would have us believe.
While emphasizing ‘scare,’ the movie overlooks biotechnology’s advantages. Biotech crops require less tilling. This reduces soil erosion; improves moisture retention; increases populations of soil microorganisms, earthworms and beneficial insects; and reduces sediment runoff into streams.
The movie mocks biotechnology’s potential value to the developing world, characterizing the argument as one designed for public relations use. But biotech crops such as ‘golden rice’ could help with the severe Vitamin A deficiency that afflicts hundreds of millions in Africa and Asia, ¬ including 500,000 children who lose their eyesight each year.
As pointed out by Greenpeace co-founder Patrick Moore, now a vociferous critic of the activist group, ‘Greenpeace activists threaten to rip the biotech rice out of the fields if farmers dare to plant it. They have done everything they can to discredit the scientists and the technology.
‘A commercial variety is now available for planting, but it will be at least five years before Golden Rice will be able to work its way through the Byzantine regulatory system that has been set up as a result of the activists’ campaign of misinformation and speculation,’ Moore said. ‘So the risk of not allowing farmers in Africa and Asia to grow Golden Rice is that another 2.5 million children will probably go blind.’
Garcia’s ‘The Future of Food’ is steeped in the Greens’ tragic campaign of misinformation. Many long-time anti-biotech campaigners helped her make the movie, in which not a balancing thought or counter-opinion is presented.
The ‘Future of Food’ purports to be a ‘documentary’ – a movie that sticks to the facts. It doesn’t. Hollywood will need a new Oscar category for this one. How about ‘crockumentary’?

Lowe’s Vs. Home Depot
Posted by Eddy Elfenbein on February 27th, 2006 at 2:19 pm

Lowe’s reported great earnings today. Stephen D. Simpson looks at the battle between Lowe’s and Home Depot:

For those who would suggest that home improvement retailing ultimately has to be like The Highlander (“in the end, there can be only one…”), I’d observe that Wal-Mart and Target have profitably co-existed, as well as Office Depot, Staples, Wal-Mart’s Sam’s Club, and Costco.
All that said, it’s clearly true that Lowe’s is the pluckier and faster-growing of the two concepts. Sales in the fourth quarter climbed over 26% (nearly 8% on a comp-store basis), and earnings per share rose nearly 36%. Certainly those numbers outstrip what Home Depot managed to accomplish.
And there are certainly aspects of Lowe’s model that could be seen as working better than Home Depot’s. Lowe’s is generally thought to have better customer service, and the notion of trying out metro/urban stores is interesting.
By the way, Home Depot still has superior returns on capital. Home Depot also has a leg up in terms of international expansion and is moving aggressively into service businesses and MRO/industrial supply. So in this Fool’s opinion, comparing Home Depot and Lowe’s is no longer a fair straight-away comparison.

Good Day Today
Posted by Eddy Elfenbein on February 27th, 2006 at 12:57 pm

If the market holds, the S&P 500 will close at a four-year high. The S&P 600 Small-Cap Index (^SML) and S&P 400 Mid-Cap Index (^MID) might close at new all-time highs. Plus, all 20 stocks on the Buy List are higher today.

Failure Never Felt So Good
Posted by Eddy Elfenbein on February 27th, 2006 at 11:21 am

Attention corporate weasals. Don’t try to get anything past Michelle at Footnoted.org. It just ain’t gonna fly.

And speaking of former executives, there was also this little snippet buried in Morgan Stanley’s (MS) proxy, which was also filed late Friday. Again, while the broad-brush details were known, such as Philip Purcell’s $44 million bonus, the blow-by-blow was included in the proxy (do a search for CEO settlement to find it quickly). Among the pearls are that Purcell’s secretary, which the company has agreed to pay for as long as Purcell lives, will cost the company $1.8 million and that donations to Purcell’s favorite charities (again for life) will cost the company $2.9 million. And there’s another $3.1 million for benefits the company will provide the former executive, again for the rest of his life.
Indeed, failure never felt so good.

And it pays well too.
Can you order Michelle’s book? But of course. I’ll be here when you get back.

Owning a Toll Booth
Posted by Eddy Elfenbein on February 27th, 2006 at 11:15 am

GroovyStocks on Intel (INTC):

According to Yahoo Finance, shares of Intel are now trading at 14.7 times trailing earnings and 14.1 times forward earnings with an EV/EBITDA ratio of 6.7. We think these are very reasonable multiples to pay for such a high quality company.
Sticking with Yahoo’s numbers, INTC has an operating margin of 31.1% and a profit margin of 22.3%. Return on assets is 15.7% and return on equity is 23.2%. The balance sheet has $12.8 billion in cash and $2.4 billion in debt, or over $10 billion in net cash. If you know another place where we can buy such high profitability and returns with balance sheet strength even half as good, please let us know!
Intel’s size gives it a huge competitive advantage. Here’s a quote from Columbia Business School professor Bruce Greenwald that sums the matter up:
“When Intel goes after the next generation chip, because it’s got some degree of customer captivity — which is crucial to scale advantages — Intel can expect, if it’s successful, to get 10 times as many customers as AMD. That means Intel can spend 10 times as much on developing and marketing the new chip. That’s the advantage of scale. So who’s going to win that race every time? Intel.” (Related Post)
We view owning Intel as owning a toll booth: (almost) every time somebody buys a computer you collect a fee. Sounds like a good business to us!

Back Where We Started
Posted by Eddy Elfenbein on February 27th, 2006 at 10:34 am

Price chart of Intel (gold line) and Microsoft (black line) over the last eight years:

Confessions of an Economic Hit Man
Posted by Eddy Elfenbein on February 27th, 2006 at 9:44 am

The latest offering from the Grassy Knoll gang is “Confessions of an Economic Hit Man” by John Perkins. The book has become a bestseller. In it, he claims that the world is governed by big, evil corporations who use “a combination of bribes, assassins and seductive women to enslave the poorest countries.” In contrast, Sebastian Mallaby uses a combination of facts, reason and logic to expose this nonsense.

Perkins likes to say that of the world’s 100 biggest economies, 51 are companies. This old chestnut is based on a fallacious comparison of companies’ sales to countries’ gross domestic product: Whereas GDP measures the amount of value added in an economy, sales lump together a firm’s value-added with inputs bought in from suppliers. According to an apples-to-apples comparison done by the United Nations, just two of the world’s top 50 economies were companies in the year 2000. Of the top 100 economies, 29 were companies.
That may still sound like a lot, but remember that companies compete against each other. In the world as Perkins dreams it, the top 100 or so firms are joined in a shadowy conspiracy. But the reality is that Exxon Mobil schemes to undermine BP and Shell, and General Electric plots against Siemens and Hitachi. Countries don’t face a united corporatocracy. They play firms off against each other.

1040 Tax Mistakes
Posted by Eddy Elfenbein on February 27th, 2006 at 12:15 am

MarketWatch looks at the lines on the 1040 Form that stumble most folks. Here’s a sample:

Line 6
This year, you may trip as early as Line 6 because that’s where taxpayers enter their dependents, and the rules for who qualifies as a dependent have changed.
“Now, instead of determining whether you provided half this person’s support, the test is did they provide over half of their own support,” said Cindy Hockenberry, tax information analyst with the National Association of Tax Professionals, a trade group. See this IRS page for more information on the new definition.
The rules for a qualifying dependent “have changed to such an extent that it has left people really scratching their heads. If you can get past that, you’re doing good,” Hockenberry said.

Hedge Fund Manager Splits
Posted by Eddy Elfenbein on February 26th, 2006 at 11:33 pm

Good news: Investigators have finally tracked down missing funds of a hedge fund.
Bad news: Except for $150,000, $150 million is still missing.
More bad news: So is the CEO.

Kirk S. Wright, founder and CEO of Atlanta-based International Management Associates LLC, said the firm was beset with redemptions but had about $150 million of client assets in the bank, during a Feb. 15 interview with The Wall Street Journal. Two days later, a Georgia state justice froze the assets of the firm and its three principals, including Mr. Wright, after several current and former professional football players (who? tell me!). who invested more than $15 million with the firm accused the company of fraud, forgery and refusing to meet redemption requests.
Other International Management clients quickly made similar allegations, kicking a regulatory inquiry into high gear. Over the past week, the Securities and Exchange Commission and a receiver (possible pun, not sure) appointed to mind International Management’s assets have scoured the hedge-fund firm’s offices, records and accounts, but found only crumbs (crumbs??). To date, investigators have only tracked down a tenth of one percent of the money Mr. Wright claimed was in the bank on Feb. 15.
A warrant was issued for his arrest in Georgia state court late Friday. Mr. Wright, who claims an investor has threatened his life, hasn’t been seen for more than a week, according to people close to the situation. He postponed a visit to the SEC’s Atlanta office to answer questions last week, saying he needed time to hire local counsel.

Let’s assume it was a player who made the threat, which one could it be? I mean, there are so many possible suspects.
According to the Rocky Mountain News:

The former Denver Broncos players liked the investment pitch, pouring millions of dollars into the Atlanta-based hedge funds.
Now they say they were burned.
Steve Atwater, Terrell Davis and Ray Crockett, along with other investors including current Broncos wide receiver Rod Smith, have filed a lawsuit in Georgia against International Management Associates, saying the firm and its fund managers committed fraud and forgery and failed to return their money.
Clyde Simmons, who played with the Philadelphia Eagles and the Chicago Bears, among other teams, and Blaine Bishop, a former Eagle and Tennessee Titan, entrusted money to the firm, too, the lawsuit said.

Here’s what they had:

Atwater, a former safety, and his family had $4.5 million in the funds, the lawsuit said. Davis, a star running back in the late 1990s, had investments valued at $2.2 million, while Crockett, an ex-cornerback, had a total of $3.7 million. Smith, meanwhile, had $1.5 million.

If anyone needs me, I’ll be scanning eBay for Super Bowl rings.